TRADE groups and drinks firms have welcomed chancellor George Osborne’s decision to scrap the duty escalator for alcohol.
The escalator, introduced by the government in 2008, ensured duty on alcohol rose by 2% above inflation each year. It had originally been intended to run until 2015.
However, the escalator was removed for beer last year and, as part of last month’s Budget, has now been scrapped altogether.
In addition to removing the escalator, Osborne also announced that duty on spirits and “normal cider” will be frozen, and duty on beer cut by a further 1p a pint.
Mike Benner, chief executive of CAMRA, described the tax cuts as “unprecedented”.
“Keeping the price of a pint affordable is vital for the long-term health of the pub sector and CAMRA would hope this latest vote of confidence in British pubs will go some way to slowing the rate of closures, by encouraging more people to make use of their local this summer,” he said.
And Brigid Simmonds, chief executive of the British Beer and Pub Association (BBPA), said the cut in beer duty was “fantastic news” for the country.
“It also shows that the government has understood our case, that taxes on British beer had become far too high, and action was long overdue,” said Simmonds.
The Wine and Spirit Trade Association said it expects the Budget to bring a number of financial benefits to the drinks industry and the country overall, including a boost to public coffers and the creation of around 6000 new jobs.
“The move will help British pubs, bars, and restaurants up and down the country, and will boost jobs and investment in the great British drinks industry and in the hospitality sector more widely,” said chief executive Miles Beale.
“While we would have liked to have seen a complete freeze on wine duty, this is a positive step and as such the WSTA applauds the chancellor’s decision to scrap the escalator.”
Heineken’s UK managing director, David Forbes, said the Budget sent “a clear message that brewing, cider making and the great British pub are important to the UK’s economy”.
In addition to the developments on duty, Osborne announced that a planned increase in fuel duty – originally scheduled for September – will not happen.
• Wine and spirit industry will save £175m in duty payments – WSTA
• 7000 jobs will be saved over the next two years – BBPA
• Boost to public coffers of £230m – WSTA/Ernst & Young